Innovation & Technology

OYO Rooms - Ritesh Agarwal: "OYO was conceptualized to solve a really big problem in the hospitality sector"

OYO Rooms is a technology-driven network of Indian hotels spread across 177 cities, offering standardized and affordable stay experiences. The company provides an easy-to-use mobile app for all its customers, that allows them to order room service directly from their smartphones, as well as check in and out of the hotel without waiting at the reservation desk.

OYO Rooms is a technology-driven network of Indian hotels spread across 177 cities, offering standardized and affordable stay experiences. The company provides an easy-to-use mobile app for all its customers, that allows them to order room service directly from their smartphones, as well as check in and out of the hotel without waiting at the reservation desk.


Leaders League. What is OYO Rooms’ biggest advantage over Airbnb in a country like India?

Ritesh Agarwal. Airbnb operates on a model that curates and lists properties on its platform, making them discoverable to travelers looking for no-frills local experiences.

When we launched in India, the problem was not as much about making hotels or bed-and-breakfast properties discoverable, as it was about building trust and credibility in a segment where customers had no benchmarks or recommendations to go by. There was not a single hotel brand or travel website that guaranteed quality accommodation in the budget-hotel category. This was for a reason – standards of service and amenities in this category just did not exist. So with OYO, we set about building a predictable and standardized experience for guests, and ensuring that we secured enough inventory so that anytime availability was not a challenge.

In a little over a year, the OYO brand name has come to symbolize value-based offerings with assured amenities such as free wifi, complimentary breakfast, TV, clean and spacious rooms --- by taking care of these basic expectations of travelers, we have now built India’s largest network of branded hotels.

Unlike us, AirBnB also does not control guest experience through standardization because one of their USPs is authentic and local experiences. While this can appeal to niche leisure travelers, family travelers and business travelers prefer to have these expectations outlined and do not like surprises. This has contributed to our success in the category compared to older, well-established players in online travel.

 

Leaders League. What were the most groundbreaking innovative factors that resulted in your company’s exponential growth over the last few years?

R.A. There are a few of these but our secret sauce really is just sheer hard work. Whether it is convincing hoteliers about a completely new business model where we would take a part of their inventory, “transform” the rooms and brand the property, or going out in the market signing up new properties and onboarding partners day after day, our success is a testament to the commitment and efforts of the team. One of the pivotal factor was the launch of our mobile app, just about a year ago. We built a clean, intuitive UI, and what I think has to be the world’s fastest hotel-booking app. It takes 3 taps and 5 seconds to search and book a hotel on OYO. Today, the app is a dominant channel, contributing over 60% of the business.

Another market-first innovation is our focus on building technology for the supplier (hotelier) -- something that was a first-in-the-industry. Working closely with them to push usage of our proprietary tablet-based property-management and revenue-management apps ensured we had greater visibility and control over the supply.

Finally, the quality of our investors has helped us gain more confidence and make aggressive bets. 

 

Leaders League. Do you think this concept would have worked in any other country? Do you intend to expand to other countries?

R.A. OYO pioneered a business model which is a first in the world. I believe this has potential in markets such as South East Asia, Africa and South America where unbranded hotel supply is fragmented and under-serviced. But India, where internet population is booming, primarily driven by youth who are increasingly adopting smartphones, was probably the best place to launch this business and demonstrate its success.

We are keeping a close watch on international markets. In January this year, we launched our operations in Malaysia. We started our international expansion with Malaysia because of the attractive market characteristic of sizeable internet and mobile penetration which is complementary to our approach. We will continue to tap other markets at the right time.

 

Leaders League. What are the reasons behind the success of OYO Rooms with investors like SoftBank and Sequoia Capital?

R.A. The things that investors find most attractive are a clear vision, the ability to execute, and team-strength. OYO was conceptualized to solve a really big problem in the hospitality sector. It unlocked a massive opportunity that had existed but wasn’t available until we took the lead. Clearly, our business plan had long-term sustainability that was attractive to our investors. We also have extremely talented folks at the leadership level, and investors trust our abilities to execute our plans. 

 

Leaders League. Considering you started your first business at age 17, and went on to win the Peter Thiel fellowship without ever setting foot in a business school, how important do you consider a formal business education?

R.A. I am not a big believer in formal education but neither do I dissuade folks from it. It really depends on what works for a person, at their particular life-stage. I think it is important to follow your dreams.

Life is the best teacher, and all my learning has been on-the-job. I loved the Thiel Fellowship experience because it gave me an opportunity to experience what being part of a network and ideating with like-minded folks feels like. I don’t miss that anymore because now I have over a thousand folks who are working with me day in and day out to solve the very problems I want to solve.

Formal education does provide opportunities to network and fast-tracks your learning on certain softer aspects of personality-development, but I just didn’t see it as being a choice for me. I had too many ideas and too much enthusiasm to start out, without being encumbered by an academic goal or milestone.

 

Leaders League. What is the way ahead for OYO Rooms in the next 3-5 years?

R.A. We want to be the go-to destination for every traveller – whether on a bus, a train, or an airline, traveling intra-city or inter-city, looking at short-term or long-term stay, at a hotel or a service apartment. While on that path, we also aspire to be among the best start-ups in the world, and build a global business.

 

- M.R.C

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